The Consumer Price Index rose an expected, but still high, 0.8% in August, meaning that inflation has already hit 4.4% for the first eight months of 2008 ? far above the government and the Bank of Israel?s target, of 1-3% for the entire year.?
Over the past 12 months, inflation has been a whopping 5%, according to figures released yesterday by the Central Bureau of Statistics.?
Due to the ongoing inflation, Bank of Israel Governor Stanley Fischer is expected to raise interest rates by 0.25 percentage points at the end of the month, for the fifth time in a row. This would peg Israel?s key lending rate at 4.5% for October.?
Prices have increased particularly rapidly since April, with inflation running at a 5% annual pace in the April-August period.?
Fresh vegetables showed particularly big price increases in August, of 12.5%. Culture and entertainment costs rose 1.9%, while household maintenance was up 1.2% for the month.?
However, these increases were partially offset by drops in clothing and shoe prices, 8.4%, and transportation, 0.6%.?
Food costs edged down by 0.1% in August, with the price of rice falling 8.2% and instant coffee prices dropping 7.1%.?
Produce prices rose 4.7% overall, with the big increase in vegetable prices being partially offset by a 0.4% drop in fruit prices. Cabbage was up 54.8%.?
Housing prices rose steeply, by 3.7%, but health costs were unchanged.
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